Pot producer’s shares on wild roller-coaster

TORONTO • Shares in marijuana company Tilray Inc. went on a wild ride — surging by more than 90 per cent then briefly dropping into negative territory and rebounding — one day after the licensed producer said it got approval to export medical cannabis from Canada to the U.S. for a clinical trial.

The stock closed at more than US$214, up 38 per cent, after being halted five times within one hour.

The drastic swings in the stock follow a nearly 30-percent jump on Tuesday after the Nanaimo, B.C.- based firm announced it got the green light from the U.S. Drug Enforcement Administration to export cannabis in capsule form to a researcher at a university in the U.S., where the drug is still illegal at the federal level.

Tilray will be exporting to the University of California San Diego capsules with two active ingredients—can na bid io land tetra hydroc annabinol, better known as CBD and THC — extracted from the cannabis plant for a clinical trial as a potential treatment for essential tremor, a neurological disorder that causes uncontrollable shaking. The one-year trial is scheduled to begin in 2019.

Til ray shares shot up over US$230 just after the trading day began on Wednesday, but quickly backed off.

However, by late afternoon, surged to US$300, up 94 per cent from its previous close of US$154.98. Roughly an hour later, the share price slipped to US$151.40 before climbing back up to close at US$214.06, up 38.12 per cent. Tilray’s stock was halted five times between 2:52 p.m. and 3:48 p.m. — all volatility trading pauses.

Tilray completed its initial public offering in July with its shares priced at US$17 pershare.

The licensed producer’s market capitalization was roughly US$19.9 billion at close. The massive surge in Tilray Inc. has delivered a multi billion dollar windfall for a little-known private equity fund backed by investor Peter Thiel.

Privateer Holdings Inc., a Seattle-based fund started seven years ago to focus on the marijuana business, holds 76 per cent of Tilray.

Thiel’s Founders Fund became the first institutional investor in the cannabis industry through Privateer Holdings’ US$75 million Series B financing round in December 2014, according to the company’s website.

Thiel, 50, was an early investor in Facebook Inc. and is known for making unconventional investments in different industries. Founders Fund has also backed Airbnb Inc., Lyft Inc., Space Exploration Technologies Corp. and Palantir Technologies Inc.

Brendan Kennedy, Michael Blue and Christian Groh founded Privateer in May 2010 and the firm later invested in Tilray. The trio effectively owned about 45 per cent of Privateer’s holdings in Tilray as of March 31.